Motor finance fraud cases
rose by 17% in the first three months of the year compared to first
quarter of 2010, reports the Finance & Leasing Association
(FLA).
The hike is mostly due to an
increase in ‘first-party fraud’, where customers take car
agreements on behalf of other drivers, or ‘sub-hire’ financed
vehicles. First-party fraud accounted for 45% of fraudulent
activity in the first quarter of the year.
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Sub-hiring is where
fraudsters take out credit for a car in order to profit from hiring
it to other drivers who are often complete strangers. This is
illegal because the finance company remains the legal owner of the
car until the finance is paid off – and it has only approved the
customer who applied for credit to drive the vehicle.
The total value of motor
fraud cases in the first quarter was £3.8m, up 13.8% on the first
quarter of 2010. There were 230 motor fraud cases in the first
quarter, and 865 in the year to 31 March.
FLA member finance companies
prevented more than 2,000 cases of attempted fraud in the first
quarter, preventing at least £26 milllion of fraudulent
deals.
The vehicle recovery rate was 46%.
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